Intellectual Property Strategy

Pharmaceutical IP Strategy in the US – Merck’s latest tactic for Zocor

In preparation for expiry of the key blocking patent
covering Zocor (Simvastatin),Merck has made two
strategic but controversial moves in the USA to neutralize any advantage that
generic first filers Ivax (Teva)
and Ranbaxy would
obtain from the generic 180 day exclusivity under the Hatch-Waxman
legislation:

1. In 2003, Merck
requested that the Orange Book patents listed in relation Zocor be
delisted. This controversial tactic
effectively removed the chance of generic exclusivity and is currently the
subject of litigation before the US Court of Appeals for the Federal
Circuit (see my article about this from 29 May)

2. It was widely
reported on Wednesday 21 June (for example by Reuters), that Merck intends to sell Zocor at a price
lower than the generic entry price.
(Merck secured the cheapest co-payment level for its Zocor branded
drug on the coverage list of U.S.
health insurer UnitedHealth Group Inc.)

Comment

Patent expiry

Controversy

Needless to say both moves by
Merck are controversial and this latest one has prompted at least one request
for a U.S. Federal
Trade Commission investigation (from Senator Charles Schumer of New York).

Increasingly complex game of chess

The advent
of strategies such as these and others (eg. the various forms of authorised
generics) underscore that the chess game played out in the global (and
particularly the US)
pharmaceutical market is becoming a lot more complicated (and interesting).

Other
jurisdictions

Of course,
such strategies may also be adopted in other jurisdictions. However, they are less critical because
without the Hatch-Waxman legislation to encourage earlier generic entry,
there is less need. In other
countries, Brand pharmaceutical companies have traditionally been able to
maintain a sufficient brand premium and market share so as not to bother with
such strategies.

Generic
activity in the US
under the Hatch-Waxman regime has reached a level at which the brand premium
alone is insufficient — clearly Merck is more interested in market
share in this latest move.

No doubt
the ongoing CAFC litigation and the outcome of any Federal Trade Commission
investigation will be closely monitored by other players in the
industry.Depending on the result,
generic players may need to brace themselves for more of the same from other
brand companies.(There are, of course
strategic responses available, but that’s a topic for another day.)